Bitcoin is a group of technologies, the one that creates Bitcoin's "value" is a digital implementation of scarcity. Usually digital things are easy to copy infinitely, so Bitcoin's implementation of scarcity is one of its core innovations. Scarce things inherently have value in society, beyond the material themselves, because we primarily make transactions (trade) using scarce things. In other words, scarce things are useful simply by being scarce. So if you take there's value in something being purely digital, and decentralized, then Bitcoin has value through its implementation of scarcity.

It has a social network effect of people who agree that it's the store of value for the future. Your paper dollar bill has very little intrinsic value. It's just a shared acceptance.

Uh, my paper dollar is backed by the might of the US government and the US economy. It's a lot more than just "shared acceptance". Countries couldn't just switch off the US dollar reserve currency for international trade without massive economic repercussions, which is why no country or set of countries has developed a viable alternative to the dollar for a global reserve currency. It's not like China/Russia wouldn't like to, they have no choice.

The EU came the closest, but no one outside of Europe has wanted Euros since the Greek economic crisis. Hell a large chunk of internal European trade is still done in dollars on the back-end.

On the stick side, under Obama the US stepped up the various mechanisms such that we can cut off trade denominated in dollars on a whim to anyone we want, that's part of how sanctions work. If we (the US) decides we don't want a country to be able to trade internationally, we just cut them off from converting into dollars at the exchanges. There are no economically viable ways around this at present. Just ask Iran.

Bitcoin however, will collapse the moment enough of the crowd loses the faith. It'll go on for a while because it's the new hotness, and some people will get lucky and rich, but at the end of the day it's an ultimately worthless commodity (unless you're trying to avoid government regulation over financial transfers) that exists as long as world governments allow it to exist.

Sure, if theoretically some critical mass of the population all collectively decided Bitcoin was the future it would be, but right now we can't get a critical mass of US citizens to wear masks during a pandemic that's killed hundreds of thousands. So I wouldn't hold out too much hope for pan-Bitcoinism.

Your whole comment is basically an ad for Bitcoin. USD is valuable because we have an imperialistic global army that will kill you or starve you off if you don't use it? Seems like something we desperately need an alternative to.

USD is the dirtiest fiat there is because it's backed by blood at a global scale.

All fiat currency is backed by blood and violence at some scale, it's meted out by court systems, police and military forces. The US happens to be the sole global superpower so the scale is larger for us, but we're actually a very well behaved superpower by historical standards. The "Imperialistic Global Army" has allowed countries who could never have traded globally due to lack of resources to industrialize. The US Navy keeps the trade lanes open for everyone, or at least it did. Whether that will be a thing going forward is an open question now that the Cold War mentality is fading and our troop deployments at historical lows. We might be going back to a truly imperialistic attitude of protecting US and allied trade lanes and letting everyone else build their own Navies if they want to protect their shipping (many countries couldn't do this even if they wanted). But Bitcoin wouldn't be a solution to that either.

As for moral purity, it's no secret that a significant (albeit unknowable) portion of Bitcoin's current value comes from illegal transactions concerning everything from human trafficking to drug sales to organized crime rackets. The ability to obfuscate financial transactions is part of its intrinsic value, so anyone with an interest in doing so will be attracted to it. Plus if Bitcoin were to somehow grow large enough to even consider replacing the dollar, all the blood behind the dollar would simply shift to Bitcoin in some (albeit likely different) manner. Someone has to enforce monetary policy and financial laws, a chaotic, decentralized enforcement would arguably be even worse than centralized fiat enforcement.

There's no way forward financially without some blood on your hands at some stage. So for my money I'm going to build my financial house on solid ground. I'm all for making the system more just and less bloody, but IMO Bitcoin isn't it. In the meantime we've all got to play the hand we're dealt, the only other option is to be a martyr, and while they might get some occasional press and lip service, martyrs typically don't accomplish much.

> Hell a large chunk of internal European trade is still done in dollars on the back-end.

No. Internal trade is balanced with target2.

Right, but to my knowledge target2 doesn't preclude the use of other exchanges. It wouldn't be illegal for say, Spain to convert to dollars and then back to Euros when selling to France. I'm having a hard time finding the statistics I read a few years back, and maybe things have changed or I was misinformed, but I remember reading while most internal EU trade is settled in Euros a significant amount was still settled in dollars for a variety of reasons (legacy systems and such).

Dollars have some amount of intrinsic value: they are the only currency accepted by the US government to pay any taxes due to them. Also, by force of law, anyone living in the US must accept dollars as a way to settle a debt that is due to them, which also gives them some intrinsic value.

So I own some crypto too, but the dollar has a much larger social network effect of people who agree it's the store of value for the future, no? So does the Euro. It's a bit weird that you would claim that bitcoin's intrinsic value is that it's a store of value, but then deny the same reality for other traditional currencies.

I don't think that's true at all. Inflation of fiat is widely accepted as people know more gets printed all the time. You know your dollar will be worth less next year due to inflation. This is why people invest in interest baring accounts and stocks. Dollars by themselves lose money over time.

And yet more people use dollars, and have bank accounts with dollars or their home country's currency.

Bitcoin's block reward can be changed as well, it's not some immutable law of the blockchain. I'm not claiming that it will change, but I also see the potential for there to be a change there to incentivize mining once the block rewards are minuscule and miners are dependent on transaction fees for profitability.

> And yet more people use dollars, and have bank accounts with dollars or their home country's currency.

Those people are losing money due to inflation. This is well known and an issue with people keeping cash in "mattresses".

> Bitcoin's block reward can be changed as well, it's not some immutable law of the blockchain. I'm not claiming that it will change, but I also see the potential for there to be a change there to incentivize mining once the block rewards are minuscule and miners are dependent on transaction fees for profitability.

This is called a hard fork, and has been done more or less unsuccessfully multiple times now.

And yet people still own dollars. I own various investments, and also dollars.

I'm aware of what a hard fork is, I'm also aware of what a 51% attack is. The risk of that down the road could be a fair amount of incentive for folks (and the network effect) to get on board. I'm not saying something will happen there. You do need to maintain clarity to understand the reality of what's possible though. It's also possible that bitcoin's first mover advantage is overcome at some point.

As I said, I own some cryptocurrency too. It's important to see through the mania that is the current market.

You (and I) own dollars but the government can always print more. It's like owning shares in a company that has the habit of regularly issuing more shares, diluting you. We know the denominator on BTC (21,000,000) the denominator on USD is unknown and always increasing.

The fixed, deflationary nature of Bitcoin isn't the only financial instrument we need, but it is desperately needed in its own right.

Paper money is legitimized by the government requiring you to pay it in that denomination. This then gets further legitimized via bonds, bank lending, etc.

Competing tenders in most countries are outlawed. It is an enforced shared belief.

I can pay my taxes with a paper dollar bill.

That's not just shared acceptance because even if the mighty USD should crumble and fall, a US citizen will still be able to pay the taxman with a dollar bill which is in itself of great value.

I fail to see the distinction between “shared acceptance” and “social network effect of people who agree”. Each has value because people agree it does.

MMT people would say the intrinsic value of dollar is that you can pay your taxes in them. And if you can not you go to jail